IRS gives 'social welfare' status to Karl Rove group

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Republican operative Karl Rove’s Crossroads GPS group, which spent tens of millions of dollars on attack ads against President Obama in 2012, has been granted tax-exempt “social welfare” status by the Internal Revenue Service. 

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After deliberating for more than five years, the IRS sent a letter to Crossroads GPS in November telling the group that it qualifies under section 501(c)(4) of the tax code, allowing it to raise and spend unlimited amounts of money while keeping its donors’ identities secret. 

The only catch is that, under the current vague interpretation of the law, more than half of the group’s spending must be on “social welfare” activities. 

During the 2012 election cycle, Crossroads GPS — a sister organization to the super-PAC American Crossroads, also founded by Rove — technically abided by the “social welfare” requirement, reporting in its tax return that it spent only 39 percent, or $74 million out of its total $189 million, on “direct political activities.”  

But millions of the non-political spending involved “issue” advocacy that attacked Obama’s policies without expressly advocating for or against a particular candidate.

The IRS ruling was first reported by the nonpartisan watchdog, the Center for Responsive Politics, and was welcomed by Crossroads GPS President Steven Law. 

“We have always taken compliance very seriously, so we’re not surprised by the final result,” Law told The Hill in a statement. 

“What we were surprised by was how long it took and how people outside the IRS improperly tried to influence and politicize the process, not just against us but against many other law-abiding advocacy groups.” 

Campaign finance reformers are incensed by the decision, which they believe validates politically motivated “dark money” spending on a colossal scale.  

Founded in June 2010, Crossroads GPS was one of the first organizations to emerge from the Supreme Court’s Citizens United decision, which paved the way for largely unregulated “independent” spending in campaigns. 

Fred Wertheimer, the president of campaign finance reform group Democracy 21, described the IRS's decision as "a complete abdication of the agency’s duty to enforce the tax laws.” 

“By no stretch of the imagination can Crossroads GPS be considered a 'social welfare' organization,” Wertheimer said. “It is a political operation — the brainchild of political operative Karl Rove as a means to provide secrecy for donors who want to influence elections.” 

“Since 2010, Crossroads GPS has spent tens of millions of dollars on campaign ads to elect Republicans to Congress.  

“It receives multimillion-dollar donations to fund those campaign ads, but it does not disclose the names of those donors, claiming that it has a right to shield its donors from disclosure as a ‘social welfare’ organization.”

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